Calcutta HC Stays Recovery of Outstanding GST Dues considering Non Constitution of GSTAT [Read Order]

In a recent petition which is against the appellate order that allows the initiation of the Goods and Service tax recovery proceedings , the Calcutta High Court stayed the same considering the non constitution of Goods and Service Tax Appellate Tribunal (GSTAT).

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Rockfield Mining and Minerals Pvt. Ltd, the writ petitioners challenged the impugned appellate order dated 19th March, 2024 passed by the respondent no.3. Counsel appearing for the petitioners further relies on Circular No.224/18/2024-GST dated 11th July, 2024 issued by the Ministry of Finance debarring the guidelines for recovery of outstanding dues in cases wherein first appeal has been disposed of, till Appellate Tribunal comes into operation.

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The said circular, it was stated that in order to facilitate the taxpayers to make the payment of the amount of pre-deposit as per sub- section (8) of Section 112 of CGST Act, and to avail the benefit of stay from recovery of the remaining amount of confirmed demand as per sub-section (9) of Section 112 of CGST Act, it is hereby clarified that in cases where the taxpayer decides to file an appeal against the order of the appellate authority and wants to make the payment of the amount of pre-deposit as per subsection (8) of Section 112 of CGST Act, he can make the payment of an amount equal to the amount of predeposit by navigating to Services >> Ledgers>> Payment towards demand, from his dashboard.

The taxpayer would be navigated to Electronic Liability Register (ELL) Part-II in which he can select the order, out of the outstanding demand orders, against which payment is intended to be made. The amount so paid would be mapped against the selected order and demand amount would be reduced in the balance liability in the aforesaid register. The said amount deposited by the taxpayer will be adjusted against the amount of predeposit required to be deposited at the time of filing appeal before the Appellate Tribunal.

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The taxpayer also needs to file an undertaking/declaration with the jurisdictional proper officer that he will file appeal against the said order of the appellate authority before the Appellate Tribunal, as and when it comes into operation, within the timelines mentioned in Section 112 of the CGST Act read with Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019. On providing the said undertaking and on payment of an amount equal to the amount of pre- deposit as per the procedure mentioned in para 4 above, the recovery of the remaining amount of confirmed demand as per the order of the appellate authority will stand stayed as per provisions of sub- section (9) of Section 112 of CGST Act.

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In case, the taxpayer does not make the payment of the amount equal to amount of pre- deposit or does not provide the undertaking/declaration to the proper officer, then it will be presumed that taxpayer is not willing to file appeal against the order of the appellate authority and in such cases, recovery proceedings can be initiated as per the provisions of law. Similarly, when the Tribunal comes into operation, if the taxpayer does not file appeal within the timelines specified in Section 112 of the CGST Act read with Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019, the remaining amount of the demand will be recovered as per the provisions of law.

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Mr. Siddiqui, Additional Government Pleader representing the State submitted that the writ petition may be heard on the usual terms provided under Section 112(8) of the said Act.

As the Appellate Tribunal is yet to be constituted,the court viewed that the petition should be heard. Since, the petitioner has been able to make out a prima facie case, there shall be an unconditional stay of the demand of the Appellate order dated 19th March, 2024, for a period of two weeks from date. The single bench of Justice Rajarshi Bharadwaj directed the petitioner to make payment of 10% of the balance amount of tax in dispute, in addition to the amount already deposited in terms of Section 107(6) of the said Act, within two weeks from date, the interim order passed herein, shall continue till the disposal of the writ petition or until further order, whichever is earlier.

To Read the full text of the Order CLICK HERE

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